Malaysia's annual economic growth accelerated to a 3-1/2-year high in the fourth quarter, the central bank said on Wednesday, confident that strong Asian demand would help the economy survive a global slowdown. A ramp-up in state spending, low credit costs and a healthy job market have kept the wheels of the economy spinning.
But some analysts say it is a matter of when - not if - a faltering global economy will take a toll on Malaysia. The economy in the fourth quarter rose 7.3 percent from a year earlier, handily beating market forecasts for a 6.5 percent rise.
Fourth-quarter expansion was the quickest since a 7.9 percent growth in the second quarter of 2004. Third-quarter 2007 growth was revised down slightly to 6.6 percent from 6.7 percent previously. The economy grew 5.8 percent in the second quarter from a year earlier.
For all of 2007, growth came in at 6.3 percent, topping a government target of 6.0 percent and economists' expectations for a 6.1 percent rise. GDP rose 5.9 percent in 2006. The rosy data comes ahead of a general election on March 8, when the ruling coalition hopes a strong economy would temper voters' concerns about racial and religious discord.
The central bank said the economy was on a steady course, sheltered by strong Asian demand and high commodity prices. "The growth prospects for the Malaysian economy remains favourable," Bank Negara, the central bank, said in a statement. A Reuters poll in December forecast 5.9 percent growth for 2008, versus the government's prediction of 6-6.5 percent.
Malaysian inflation averaged 2.0 percent last year, the lowest since 2004. Economists expect the rate to rise to around 3.0 percent this year. Malaysia's fourth-quarter annual economic growth rate was above neighbouring Singapore's 5.4 percent and Indonesia's 6.25 percent.
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